Correlation Between Amgen and Tandem Diabetes
Can any of the company-specific risk be diversified away by investing in both Amgen and Tandem Diabetes at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Amgen and Tandem Diabetes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amgen Inc and Tandem Diabetes Care, you can compare the effects of market volatilities on Amgen and Tandem Diabetes and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Amgen with a short position of Tandem Diabetes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amgen and Tandem Diabetes.
Diversification Opportunities for Amgen and Tandem Diabetes
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Amgen and Tandem is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Amgen Inc and Tandem Diabetes Care in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tandem Diabetes Care and Amgen is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Amgen Inc are associated (or correlated) with Tandem Diabetes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tandem Diabetes Care has no effect on the direction of Amgen i.e., Amgen and Tandem Diabetes go up and down completely randomly.
Pair Corralation between Amgen and Tandem Diabetes
Given the investment horizon of 90 days Amgen Inc is expected to generate 0.35 times more return on investment than Tandem Diabetes. However, Amgen Inc is 2.84 times less risky than Tandem Diabetes. It trades about 0.02 of its potential returns per unit of risk. Tandem Diabetes Care is currently generating about 0.0 per unit of risk. If you would invest 26,729 in Amgen Inc on August 26, 2024 and sell it today you would earn a total of 2,724 from holding Amgen Inc or generate 10.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amgen Inc vs. Tandem Diabetes Care
Performance |
| Timeline |
| Amgen Inc |
| Tandem Diabetes Care |
Amgen and Tandem Diabetes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amgen and Tandem Diabetes
The main advantage of trading using opposite Amgen and Tandem Diabetes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amgen position performs unexpectedly, Tandem Diabetes can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Tandem Diabetes will offset losses from the drop in Tandem Diabetes' long position.| Amgen vs. Eliem Therapeutics | Amgen vs. HCW Biologics | Amgen vs. Scpharmaceuticals | Amgen vs. Milestone Pharmaceuticals |
| Tandem Diabetes vs. DexCom Inc | Tandem Diabetes vs. Inspire Medical Systems | Tandem Diabetes vs. Penumbra | Tandem Diabetes vs. Insulet |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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